Republican Or Democrat? Three Scales

Posted by Milton Recht:

From The New York Times, "Politics Aside, a Common Bond for Two Economists" by N Gregory Mankiw:

...the big trade-off faced by society is between equality and efficiency. We can redistribute income to give everyone a more equal slice of the economic pie, but as we do so we blunt work incentives and the economic pie shrinks, he [Arthur M Okun] said. From this perspective, the Democrats are the party of more equality, and the Republicans are the party of more efficiency.

Another view is that the important tradeoff is between community and liberty. As members of society, we have goals we want to achieve with others. But as we reach those shared goals, we are asked to sacrifice some personal freedoms. From this perspective, the Democrats are the party that emphasizes communal values, and the Republicans are the party that emphasizes individual liberty.

Finally, there is the issue of how much one trusts centralized governmental power. Democrats tend to want to expand the scope of the federal government to improve the lives of the citizenry, while Republicans are more fearful that centralized power leads to abuse and lack of accountability.

N Gregory Mankiw is a Harvard professor of economics.

Omega-3 Reduces Hip Fractures In Women

Posted by Milton Recht:

From "Omega-3 in Blood Linked to Postmenopausal Bone Health" on ScienceBlog:

Higher levels of omega-3 fatty acids in the blood may reduce the risk for hip fractures in postmenopausal women, recent research suggests.

Scientists analyzed red blood cell samples from women with and without a history of having a broken hip. The study showed that higher levels of omega-3 fatty acids from both plant and fish sources in those blood cells were associated with a lower likelihood of having fractured a hip.

CBO Presentation On Budget Outlook

Posted by Milton Recht:

The Federal Budget: Outlook and Challenges from Congressional Budget Office

Full Text Of US Supreme Court Case Overturning Federal Defense Of Marriage Act: US v Windsor

Posted by Milton Recht:

US v Windsor, the US Supreme Court case overturning the federal Defense Of Marriage Act is embedded below. The text is also available directly from the US Supreme Court website.

US Sup Ct Case Federal Defense of Marriage Act by Milton Recht on Scribd

Time For States to Lease Public Toll Roads To Private Companies: Indiana's Positive Experience In Leasing Roads

Posted by Milton Recht:

From The Tax foundation, "Lessons from the Indiana Toll Road" by Zachary Bartsch:

A new report by the Reason Foundation (PDF) reviews Indiana’s experience with leasing the Indiana Toll Road to a private operator.

The 156-mile Indiana Toll Road (ITR) lost money while under state operation and management. In 2006, the state leased the management, operation, expansion, and maintenance of ITR to the Indiana Toll Road Concession Company (ITRCC) for 75 years, in exchange for an upfront lump sum payment to the state of $3.85 billion.***The study concludes:

Given the overwhelming benefits that Indiana has reaped from leasing its toll road to a private operator, it makes sense for policymakers in jurisdictions with public sector toll roads to explore the potential value of leasing those assets as they develop strategies for closing a long-term mismatch between transportation needs and available funding. The ITR lease allowed the state to invest billions in transportation infrastructure during a major recession, taking advantage of competitive pricing and robust contractor competition in a down economy to modernize the state’s transportation system for decades to come.

25 State, 1.5 Million Student Study Finds Charter Schools Outperform Regular Schools: Large Educational Gains For Low Income Black And Hispanic Students In Charter Schools: Time To Replace Inner City Schools In Low Income Minority Areas With Charter Schools

Posted by Milton Recht:

From Bloomberg, "Stanford Study Says Charter School Children Outperform" by Mary Camille Izlar:

Charter school students are making larger gains in reading than their peers in traditional classrooms while performing on par in math, according to a study of 1.5 million U.S. children.

The average student at a charter -- a privately run public school -- learned eight more days of reading a year than a pupil in a regular school, according to the Stanford University study. In both subjects, poor students, black children and those who speak English as a second language fared better in charters.***Unequal Benefits
Students from all backgrounds didn’t benefit equally from charter schools, the study found. Black students in poverty achieved above-average learning gains -- equivalent to 36 additional days of learning in math -- as did low-income Hispanic students. White students fared worse overall, while Asians did more poorly only in math.

Electric Cars Lose More Trade-In Value Than Gasoline Cars

Posted by Milton Recht:

From TIME, Business & Money, "Let’s Hope You’re Not Trying to Sell an Electric Car Anytime Soon" by Brad Tuttle:

According to a new report from the National Automobile Dealers Association (NADA), plug-in electric vehicles such as the Chevy Volt and Nissan Leaf depreciate in value at a rate much higher than traditional gas-powered cars, as well as hybrids like the Toyota Prius. NADA trade-in data show that in April 2013, a 2012 Honda Civic retained 73% of its value compared to the original manufacturer’s suggested retail price (MSRP), while a 2012 Prius retained 66% of its value. The 2012 version of the Volt and Leaf, meanwhile, retained just 58% and 51%, respectively, of their value.

Friends And Family Provided The Most Help In The Aftermath Of Superstorm Sandy, Not Government

Posted by Milton Recht:

From The New York Post, "Friends and family - not government - key to surviving Sandy: poll" from Associated Press:

A silver lining frames the cloud of destruction left by Superstorm Sandy. In their hour of greatest need, families and communities — not the government— were the most helpful sources of assistance and support.

A poll conducted by The Associated Press-NORC Center for Public Affairs Research found that after the storm in New York and New Jersey, friends, relatives and neighbors were cited the most often as the people who helped them make it through.

People overwhelmingly said the Oct. 29 storm brought out the best in their neighbors, who shared generators, food, water and other supplies. Far fewer said they found help from federal or state governments.

Even With Tax Credits, Consumers' Lifetime Costs Of An Electric Vehicle Are Higher Than A Conventional Vehicle Of Similar Size And Performance: CBO

Posted by Milton Recht:

From CBO's presentation at 2013 EIA Energy Conference, hosted by the U.S. Energy Information Administration of the Department of Energy, "CBO Discusses the Effects of Tax Credits for Electric Vehicles at Energy Conference" posted by Ron Gecan, analyst in CBO’s Microeconomic Studies Division, June 24, 2013:

Effects of Tax Credits for Electric Vehicles from Congressional Budget Office

***

At current vehicle and energy prices, the lifetime costs to consumers of an electric vehicle are generally higher than those of a conventional vehicle of similar size and performance, even with the tax credits, which can be as much as $7,500 per vehicle. That conclusion takes into account both the higher purchase price of an electric vehicle and the lower fuel costs over the vehicle’s life. The additional tax credit that would be required for electric vehicles to be cost-competitive with other vehicle options is smaller for electric vehicles that have small batteries or that are substituting for vehicles with low fuel economy.***However, the tax credits have other, indirect effects: Increased sales of electric vehicles allow automakers to sell more low-fuel-economy vehicles and still comply with the federal standards that govern the average fuel economy of the vehicles they sell (known as CAFE standards). Consequently, the credits will result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next several years. As a result, the cost per gallon or per metric ton of any such reductions will be much greater than the cost calculated on the basis of the direct effects alone. However, over the longer term, the tax credit can affect total gasoline consumption and emissions if future revisions to CAFE standards are influenced by current sales of electric vehicle and expectations about future sales. [Emphasis added.]

California Orders Bitcoin To Stop

Posted by Milton Recht:

From arstechnica, "California sends a cease and desist order to the Bitcoin Foundation: Licensing is required for money transmissions in-state; Bitcoin denies such activity." by Nathan Mattise:

California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorization," according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose last month. (The license information is available on CA.gov and Forbes placed the cease and desist letter on Scribd.)

If found in violation, penalties range from $1,000 to $2,500 per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 fine.

At Google, Interviews, College GPA's, Test Scores And Brain Teasers Do Not Predict Future Job Performance

Posted by Milton Recht:

From The New York Times, "In Head-Hunting, Big Data May Not Be Such a Big Deal" by Adam Bryant:

[From an interview with Laszlo Bock, senior vice president of people operations at Google, conducted and condensed by Adam Bryant.]

Years ago, we [Google] did a study to determine whether anyone at Google is particularly good at hiring. We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship. It’s a complete random mess....***One of the things we’ve seen from all our data crunching is that G.P.A.’s are worthless as a criteria for hiring, and test scores are worthless — no correlation at all except for brand-new college grads, where there’s a slight correlation. Google famously used to ask everyone for a transcript and G.P.A.’s and test scores, but we don’t anymore, unless you’re just a few years out of school. We found that they don’t predict anything.***On the hiring side, we found that brainteasers are a complete waste of time. How many golf balls can you fit into an airplane? How many gas stations in Manhattan? A complete waste of time. They don’t predict anything. They serve primarily to make the interviewer feel smart.

Instead, what works well are structured behavioral interviews, where you have a consistent rubric for how you assess people, rather than having each interviewer just make stuff up.

Behavioral interviewing also works — where you’re not giving someone a hypothetical, but you’re starting with a question like, “Give me an example of a time when you solved an analytically difficult problem.” The interesting thing about the behavioral interview is that when you ask somebody to speak to their own experience, and you drill into that, you get two kinds of information. One is you get to see how they actually interacted in a real-world situation, and the valuable “meta” information you get about the candidate is a sense of what they consider to be difficult.

More Women Drinking Resulting In 30 Percent More Women Arrested For Drunk Driving

Posted by Milton Recht:

From The Wall Street Journal, "Why She Drinks: Women and Alcohol Abuse: Women's growing predilection for wine has a darker side—and the only way to deal with it is to acknowledge the profound differences between how women and men abuse alcohol" by Gabrielle Glaser:

According to the Wine Institute, an industry trade group, women buy the lion's share of the nearly 800 million gallons of wine sold in the U.S. annually—and they are its primary drinkers.

Indeed, more women are drinking now than at any time in recent history, according to health surveys. In the nine years between 1998 and 2007, the number of women arrested for drunken driving rose 30%, while male arrests dropped more than 7%. Between 1999 and 2008, the number of young women who showed up in emergency rooms for being dangerously intoxicated rose by 52%. The rate for young men, though higher, rose just 9%.***Gallup pollsters have repeatedly found that the more educated and well off a woman is, the more likely she is to imbibe. White women are more likely to drink than women of other racial backgrounds, but in the past few decades the percentage of women who classify themselves as regular drinkers has risen across the board. An analysis of the drinking habits of 85,000 Americans in 2002 found that 47% of white women reported being regular drinkers, up from 37% in 1992. The percentage of black women who said they drank regularly rose from 21% to 30%, and the percentage of Hispanic women who said the same grew from 24% to 32%. (American Indian and Asian-American women were not included in the study.)
***Women are more vulnerable than men to alcohol's toxic effects. Their bodies have more fat, which retains alcohol, and less water, which dilutes it, so women drinking the same amount as men their size and weight become intoxicated more quickly. Males also have more of the enzyme alcohol dehydrogenase, which breaks down alcohol before it enters the bloodstream. This may be one reason why alcohol-related liver and brain damage appear more quickly in heavy-drinking women than men.

Visualization Of Why Americans Are Leaving The US: Chart

Posted by Milton Recht:

From The Atlantic, "Why So Many Americans Are Leaving the U.S.—in 1 Big Chart: Visualizing our emigration problem" by Don Peck:

-->Source: The Atlantic

Women Have High Chances Of Pregnancy In Their Late Thirties: No Huge Fertility Drop-off From Twenties

Posted by Milton Recht:

From The Atlantic, "How Long Can You Wait to Have a Baby?" by Jean Twenge:

Surprisingly few well-designed studies of female age and natural fertility include women born in the 20th century—but those that do tend to paint a more optimistic picture. One study, published in Obstetrics & Gynecology in 2004 and headed by David Dunson (now of Duke University), examined the chances of pregnancy among 770 European women. It found that with sex at least twice a week, 82 percent of 35-to-39-year-old women conceive within a year, compared with 86 percent of 27-to-34-year-olds. (The fertility of women in their late 20s and early 30s was almost identical—news in and of itself.) Another study, released this March in Fertility and Sterility and led by Kenneth Rothman of Boston University, followed 2,820 Danish women as they tried to get pregnant. Among women having sex during their fertile times, 78 percent of 35-to-40-year-olds got pregnant within a year, compared with 84 percent of 20-to-34-year-olds. A study headed by Anne Steiner, an associate professor at the University of North Carolina School of Medicine, the results of which were presented in June, found that among 38- and 39-year-olds who had been pregnant before, 80 percent of white women of normal weight got pregnant naturally within six months (although that percentage was lower among other races and among the overweight). “In our data, we’re not seeing huge drops until age 40,” she told me.

Even some studies based on historical birth records are more optimistic than what the press normally reports: One found that, in the days before birth control, 89 percent of 38-year-old women were still fertile. Another concluded that the typical woman was able to get pregnant until somewhere between ages 40 and 45. Yet these more encouraging numbers are rarely mentioned—none of these figures appear in the American Society for Reproductive Medicine’s 2008 committee opinion on female age and fertility, which instead relies on the most-ominous historical data.

70 Percent Of Americans On At Least One Prescription Drug: 20 Percent On 5 Or More Prescription Drugs

Posted by Milton Recht:

From CBS Atlanta, "Study: 70 Percent Of Americans On Prescription Drugs:"

Researchers find that nearly 70 percent of Americans are on at least one prescription drug, and more than half receive at least two prescriptions.

Mayo Clinic researchers report that antibiotics, antidepressants and painkiller opioids are the most common prescriptions given to Americans. Twenty percent of U.S. patients were also found to be on five or more prescription medications.

No Relationship Between Dietary Salt Intake And Negative Health Outcomes: CDC

Posted by Milton Recht:

From Just another Science Blog Sites site, "Dietary Salt: Medical Science Corrects a Long-Standing Error" by Josh Mitteldorf:

The Federal Center for Disease Control (CDC) commissioned a review of the health benefits of reducing salt intake, and a draft of the final report is available on line. The take-home message is that salt, in the quantities consumed by most Americans, is no longer considered a substantial health hazzard. The average American eats about 1½ tsp. per day. What the CDC study reported explicitly is that there is no benefit, and may be a danger, from reducing our salt intake below 1 tsp per day But even above 1 tsp, the evidence is tenuous and inconsistent. It may be that we’re better off with more salt than less, up to 2 or even 3 tsp per day. How did it happen that such standard medical advice drifted astray, then went un-corrected for so long?

This review by the National Academies Institute of Medicine (IOM), commissioned by CDC, considered dozens of studies, from cross-cultural (less reliable) to prospective, randomized with control (most reliable). Most studies showed no relationship between salt intake and any health outcome. Some seemed to indicate that more salt had a beneficial effect.

More Companies Using Extensive Background Checks Of Management Prospects In Hiring Decisions

Posted by Milton Recht:

From The Wall Street Journal, "What Employers Don't Know Can Hurt You: Skeletons in Your Closet Could Haunt Your Job Prospects" by Joann S Lublin:

Corporate-investigation firms say they now cast a wider net when they probe management prospects. They examine run-ins with foreign regulators, speeding tickets, divorces, felonious relatives–along with regular visits to the local bar. Extensive vetting can cost employers up to $50,000.

About 33% of employers review at least 10 years of credit history for recruited executives, up from 23% in 2010, concludes a 2012 poll by the Society for Human Resource Management. The most important reasons for those checks include the need to reduce or prevent theft and embezzlement plus reduce liability for negligent hiring. That may be as employers look for a pattern of credit problems as opposed to issues related to the 2008 downturn, says Mr. [George] Boué [human resources vice president for Stiles Corp].

Investors Understood Riskiness of Subprime Mortgage Backed Securities At Time Of Investing Before Recession And Before Real Estate Bubble Burst: Misrepresenation As To Loan Quality Was Not A Factor In Investor Losses: Atlanta And Boston Fed

Posted by Milton Recht:

From Federal Reserve Bank of Atlanta, Real Estate Research, "Asset-Quality Misrepresentation as a Factor in the Financial Crisis" by Paul Willen, senior economist and policy adviser at the Federal Reserve Bank of Boston, with help from Chris Foote, senior economist and policy adviser at the Federal Reserve Bank of Boston, and Kris Gerardi, financial economist and associate policy adviser at the Federal Reserve Bank of Atlanta:

The table comes from a Lehman Brothers analyst report from 2005 and provides forecasts of the performance of securitized subprime loans under varying scenarios for house prices. The bottom row of this table gives the "meltdown" scenario: three years of house-price declines at an annual rate of 5 percent. Under this scenario, Lehman researchers expected subprime deals to lose about 17 percent. In reality, prices fell 10 percent per year—double the rate in the meltdown scenario—yet the actual losses on subprime deals from that vintage are expected to come in around 23 percent.

Source :Source: Lehman Brothers, "HEL Bond Profile across HPA Scenarios," in U.S. ABS Weekly Outlook, August 15, 2005, via Federal Reserve Bank of Atlanta.

This table shows that investors knew that subprime investments would turn sour if housing prices fell. The "meltdown" scenario for housing prices implies cumulative losses of 17.1 percent on subprime-backed bonds. Such losses would be large enough to wipe out all but the highest-rated tranches of most subprime deals. The table also shows that investors placed small probabilities on these adverse price scenarios, a fact that explains why they were so willing to buy these bonds.

***Investors didn't really think of securitized subprime loans as less risky than they actually were. The documentary evidence repeatedly shows that investors understood the risk inherent in purchasing MBS that were backed by loans to people with bad credit histories. As the table shows, analysts expected 17.1 percent losses in the meltdown scenario. If we assume a 50-percent loss rate for each default, then overall losses of 17.1-percent imply that 34.2 percent of the loans—more than a third—would go to foreclosure. With the benefit of hindsight, we can see that the real problem for investors was not that they didn't think subprime borrowers would default if house prices fell. Rather, they didn't think house prices would fall in the first place.

Finally, it is important to stress that the quantitative effects of the level of misrepresentation found in the paper [Piskorski, Seru, and Witkin (2013)] are economically insignificant. Remember that the harm of misrepresentation for an investor arises because misrepresentation leads investors to under-forecast defaults. Quantitatively, the largest finding of misrepresentation reported by PSW is that 15 percent of purchase mortgages had some form of misrepresentation, and that the misrepresented loans were 1.6 times more likely to default. So, if an investor assumes that none of the loans were misrepresented, then a simple calculation shows that actual defaults are likely to come in about 1.09 times higher than forecast:

(0.85 x 1) + (0.15 x 1.6) = 1.09

This calculation implies that if a naïve investor forecasted, say, 8 percent defaults for a pool of subprime loans, then the true number would actually be 8 percent x 1.09 = 8.72 percent. But even this figure overstates the effect of misrepresentation, because it assumes that the investors had access to a "pure" data set that was uncontaminated by misreporting. In any case, for subprime loans originated in 2006, actual defaults came in about 40 percentage points over what was expected. In other words, even if we assume investors were completely naïve, misrepresentation can, at most, explain 0.72 percentage points out of 40.

We feel researchers should look elsewhere for an explanation for why investors lost so much money during the housing crisis. A good place to start is the belief by all actors in the drama— borrowers, Wall Street intermediaries, and investors—that housing prices could only go up. [Emphasis added.]

Teacher Training Programs Are Mediocre: National Study

Posted by Milton Recht:

From The Washington Post, "University programs that train U.S. teachers get mediocre marks in first-ever ratings" by Lyndsey Layton:

The vast majority of the 1,430 education programs that prepare the nation’s K-12 teachers are mediocre, according to a first-ever ranking that immediately touched off a firestorm.

Released Tuesday by the National Council on Teacher Quality, a Washington-based advocacy group, the rankings are part of a $5 million project funded by major U.S. foundations. Education secretaries in 21 states have endorsed the report, but some universities and education experts quickly assailed the review as incomplete and inaccurate.***While debate swirls about the validity of the ratings of individual schools, there is broad agreement among educators and public officials — from U.S. Education Secretary Arne Duncan to governors to unions — that the country is failing to adequately train the 200,000 people who become teachers each year.

"We don’t know how to prepare teachers," said Arthur Levine, former president of Teachers College at Columbia University and author of a scathing critique of teacher preparation.***Many education schools suffer from the same maladies, Levine said. "Admission standards are low, no connection between clinical work and academic work and some of the faculty haven’t been in a school for years," he said.

A free download of the report is available.

When Patients Pay Their Own Medical Bills, Competitive Forces Keep Price Increases In Check

Posted by Milton Recht:

From John Goodman's Health policy Blog, "Why Can’t The Market for Medical Care Work Like Cosmetic Surgery?" by Devon Herrick

However, when patients pay their own medical bills, they act like normal consumers ― comparing prices and looking for value. And when patients act like prudent consumers, doctors who want their patronage must respond by competing on prices, convenience and other amenities.

Consider cosmetic surgery, one of the few areas of medicine where consumers pay out of pocket. The inflation-adjusted price of cosmetic medicine actually fell over the past two decades — despite a huge increase in demand and considerable innovation [See Figure]. Since 1992:

• The price of medical care has increased an average of 118 percent.
• The price of physician services rose by 92 percent.
• The inflation rate, for all goods and services, as measured increased by 64 percent.
• Yet cosmetic surgery prices only rose only about 30 percent.

Source: John Goodman's Health Policy Blog

Rise Of Germany's Economic Power: Fifth Of EU's Output And Quarter of Exports

Posted by Milton Recht:

From The Economist, "Europe’s reluctant hegemon: Germany, now the dominant country in Europe, needs to rethink the way it sees itself and the world, says Zanny Minton Beddoes"

Germany now appears to have the continent’s strongest as well as its biggest economy. It accounts for a fifth of the European Union’s output and a quarter of its exports. From Volkswagen to SAP, Germany’s big companies are world-renowned. Many smaller German firms are global champions in niche markets such as tunnel-boring machines and industrial cleaners.

Germany’s jobless rate, at 5.4% (using standardised OECD statistics), is less than half Europe’s average. Youth unemployment, a scourge throughout much of the rest of the continent, is at a 20-year low in Germany. The country’s budget is balanced, government debt is falling and long-term bond yields are the lowest in Europe. It is the largest creditor country in the euro zone, and as chief paymaster it has the biggest clout in determining the single currency’s future.

NIH Creates Searchable Dietary Supplement Label Database

Posted by Milton Recht:

From the National Institutes of Health, "NIH launches Dietary Supplement Label Database:"

Researchers, as well as health care providers and consumers, can now see the ingredients listed on the labels of about 17,000 dietary supplements by looking them up on a website. The Dietary Supplement Label Database, free of charge and hosted by the National Institutes of Health, is available at www.dsld.nlm.nih.gov.

The Dietary Supplement Label Database provides product information in one place that can be searched and organized as desired.

The dietary supplement website is www.dsld.nlm.nih.gov.

Politicians Think Passing Legislation Solves Problems, But Laws Must Be Effectively Implemented: The More Government Tries to Do, The Less It Can Do Effectively

Posted by Milton Recht:

From Real Clear Markets, "The More Government Does, The Bigger The Failures" by Jeffrey Dorfman:

Unfortunately for the government, an important lesson to learn is that the people are smarter than the government.

That is one of the central lessons in my macroeconomic classes. Obviously, not all people outside government are smarter than all or even the average person in government. However, there are almost 300 million people in the U.S. that don't work for a government and some of them are very smart. At least one will figure out how to outsmart, outwit, or outmaneuver the government's laws and regulations. Then she will tell other people what she knows (perhaps even selling the information).

Politicians think that once they pass legislation the problem is solved. In reality, nothing has been solved. The legislation must be implemented, often through regulations not even written at the time the law is enacted. Before and after the government legislates, people respond to the legislation; they think, they plan, and they react in order to gain the maximum advantage for themselves.

Time For Restaurant Building Permit: 60 Days In Texas: 285 Days In California

Posted by Milton Recht:

From The Wall Street Journal, "Andy Puzder: Of Burgers, Bikinis and ObamaCare: Andy Puzder, the man who revived Carl's Jr., explains why he's not expanding in California and how the Affordable Care Act is hurting employment. Expect to order with an iPad." by Allysia Finley:

These days, California is one of the few states where the company [Carl's Jr] isn't looking to expand. "Like many businesses, we love California and would love to build more restaurants," he says. But "California is not interested in having businesses grow," even though many multinational companies, including CKE [Parent company of Carl's Jr], have headquarters there.

Consider how long it takes for one of his restaurants to get a building permit after signing a lease. It takes 60 days in Texas, 63 in Shanghai, and 125 in Novosibirsk, Russia. In Los Angeles, it's 285. "I can open up a restaurant faster on Karl Marx Prospect in Siberia than on Carl Karcher Boulevard in California," he says.

Industry Average Effective Corporate Tax Rate: OECD Countries

Posted by Milton Recht:

From The Tax Foundation, "Chart: Average Effective Corporate Tax Rate by Industry, OECD Average 2000-2009" by Kyle Pomerleau:

Source: Tax Foundation

"...chart shows the average effective tax rate each industry (by two digit NAICS code) faced throughout the OECD from 2000-2009."

Groupthink At The Council Of Economic Advisers?

Posted by Milton Recht:

As Greg Mankiw noted in his blog today, with the newest appointment to the President's Council of Economic Advisers, all three members of the Council have a connection to the Harvard University Economics department. Two are economic PhDs from Harvard and one is a Harvard economics professor. The CEA advises the President on economic policy.

Freakonomics' Justin Wolfers is thrilled at the news of the latest appointment.

Are economists not aware of Groupthink? Smart people in groups often make different decisions than they would alone. The pressures for harmony and conformity within a group can lead to failures to critically evaluate alternative ideas and points of views. I would imagine this effect is much stronger among members with connections to the same elite university. Individually, each of the members is a very capable economist and deserves appointment to the CEA. Groupthink, on the other hand, makes me concerned that there maybe too much decision making conformity in the present cohort.

Since January 2008, 481 FDIC Insured Banks Have Failed: Almost 90 Percent Were Small Community Banks: Failures Caused By Too Rapid Growth, Unstable Deposits, And Excessively Concentrated Lending

Posted by Milton Recht:

From the FDIC Chief Economist Richard Brown's Testimony before the US Senate Banking Committee, June 13, 2013, "Statement of the Federal Deposit Insurance Corporation by Richard A. Brown, Chief Economist, on Lessons Learned from the Financial Crisis Regarding Community Banks before the Committee on Banking, Housing, and Urban Affairs, United States Senate; 534 Dirksen Senate Office Building, June 13, 2013:"

As the Committee is well aware, the recent financial crisis has proved challenging for all financial institutions. The FDIC’s problem bank list peaked at 888 institutions in 2011. Since January 2008, 481 insured depository institutions have failed, with banks under $1 billion making up 419 of those failures. Fortunately, the pace of failures has declined significantly since 2010, a trend we expect to continue.***In my testimony, I describe some key lessons from the failures of certain community banks during the recent crisis identified by the FDIC Community Banking Study. Consistent with the studies performed under P.L. 112-88 by the FDIC Office of Inspector General (OIG) and Government Accountability Office (GAO), the Study found three primary factors that contributed to bank failures in the recent crisis, namely: 1) rapid growth; 2) excessive concentrations in commercial real estate lending (especially acquisition and development lending); and 3) funding through highly volatile deposits. By contrast, community banks that followed a traditional, conservative business plan of prudent growth, careful underwriting and stable deposit funding overwhelmingly were able to survive the recent crisis.

Best Way To Stop Illegal Immigrants Is Through A Guest Worker Program

Posted by Milton Recht:

From The Wall Street Journal, "Guest Workers Are the Best Border Security: The antidote to illegal immigration in the U.S. is creating a legal immigration system that works." by Tamar Jacoby:

The U.S. workforce is changing. Americans are having smaller families, and birthrates are well below replacement level. Baby boomers are retiring: 10,000 leave the workforce every day. Younger workers coming up behind them are much more educated than earlier generations. In 1950, according to the Census Bureau, 56% of U.S. workers were high-school dropouts. Today, the figure is less than 5%.

The result is that the pool of people available to fill low-skilled jobs has shrunk dramatically. It is not so much that the native born don't want to work as busboys, farmhands or nurse's aides. But the overwhelming majority of Americans are now overqualified for these jobs and have other options. Meanwhile, less-skilled immigrants with no family in the U.S. have no way—no access to a visa program—to enter the country legally and work in year-round jobs. This is why so many immigrants have flowed into the country illegally in recent decades and remain here, underground.

The challenge facing Congress is to create a better system—one that works for willing immigrant workers and willing employers, replaces the current illegal influx with a legal labor force, and protects the rights of Americans who are looking for low-skilled jobs.

The worker-visa program in the Senate bill meets most of these tests.

Jay Leno Auto Part Manufacturer Through Miracle Of 3-D Printing

Posted by Milton Recht:

From The Wall Street Journal, "Who Says Jay Leno Isn't Cutting Edge? When it comes to making parts for his cars, the 'Tonight Show' host is a pioneer" by John Koten:

Mr. Leno houses his more than 200 cars and motorcycles in a cluster of solar-powered warehouselike buildings outside of Los Angeles that span 110,000 square feet. In one of the structures is an expansive shop equipped with an impressive array of 21st-century machines, including a Stratasys industrial-grade 3-D printer, a NextEngine scanner, a Fadal computer-controlled mill and a (very pricey) KMT Hammerhead water jet cutter that can slice through steel. Along with a battery of more-traditional metal machining equipment, the tools allow Mr. Leno and a small crew of garage workers to fabricate just about any auto part that has been produced in the past 100 years.

No More Scavenging
"The days of going to a junkyard and trying to find an auto part that says Packard or Franklin on it are over," Mr. Leno says. "We can make almost anything we need right here in the shop ourselves."

San Francisco Fed Projects 1 Percent Lower GDP Growth Due To Higher Income Tax Rates On Rich And Obama Health Care Taxes

Posted by Milton Recht:

From Federal Reserve Bank of San Francisco, Economic Letter, "Fiscal Headwinds: Is the Other Shoe About to Drop?" by Brian Lucking and Daniel Wilson, June 3, 2013:

The CBO projects that the federal deficit as a share of GDP will drop 1.4 percentage points per year over the next three years. This projection would ease slightly to 1.2 percentage points per year if sequestration spending cuts were reversed. By contrast, our calculation of the historical-norm deficit decline through 2015 is 0.4 percentage point per year based on the CBO’s output gap projections. This implies that the excess drag from the rapidly shrinking deficit would reduce real GDP growth annually by between 0.8 and 1.0 percentage point, depending on whether sequestration is reversed. Thus, with or without sequestration, fiscal policy is expected to be a much greater drag on economic growth over the next three years than it has been so far.

Surprisingly, despite all the attention federal spending cuts and sequestration have received, our calculations suggest they are not the main contributors to this projected drag. The excess fiscal drag on the horizon comes almost entirely from rising taxes. Specifically, we calculate that nine-tenths of that projected 1 percentage point excess fiscal drag comes from tax revenue rising faster than normal as a share of the economy. As Panel B shows, at the end of 2012, taxes as a share of GDP were below both their historical norm in relation to the business cycle and their long-run average of about 18%. However, over the next three years, they are projected to rise much faster than our estimate of the usual cyclical pattern would indicate. The CBO points to several factors underlying this "super-cyclical" rise, including higher income tax rates for high-income households, the recent expiration of temporary Social Security payroll tax cuts, and new taxes associated with the Obama Administration’s health-care legislation. [Emphasis added.]

Source: Federal Reserve Bank Of San Francisco

[HT: Political Calculations]

Video Game Players Develop Better Visual Skills

Posted by Milton Recht:

From "Video Gamers Really Do See More" on ScienceBlog:

Hours spent at the video gaming console not only train a player’s hands to work the buttons on the controller, they probably also train the brain to make better and faster use of visual input, according to Duke University researchers.

"Gamers see the world differently," said Greg Appelbaum, an assistant professor of psychiatry in the Duke School of Medicine. "They are able to extract more information from a visual scene."

40 Percent Of US Job Hiring Occurs In The South: 17 Percent In The Northeast

Posted by Milton Recht:

The Bureau of Labor Statistics (BLS) released its Job Openings and Labor Turnover Summary (JOLTS) today.

The South accounts for 40 percent of all US job hires. BLS defines the South as Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

The Northeast accounts for 16.9 percent. BLS defines the Northeast as Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

Percent of Total US Job Hires by Region
Northeast - 16.9 Percent
South - 40.3
Midwest - 22.1
West - 20.7

A hire is not always a net addition to total employment. In addition to filling a new position, a hire includes filling vacant positions due to layoffs, firings, and voluntary quits.

The data is available in Table 8 of JOLTS.

Politicians Biased in Favor Of More Surveillance

Posted by Milton Recht:

From Peggy Noonan's Blog, "The Era of Metadata"

The thing political figures fear most is a terror event that will ruin their careers. The biggest thing they fear is that a bomb goes off and it can be traced to something they did or didn’t do, an action they did or didn’t support. They all fear being accused of not doing enough to keep the citizenry safe.

This is true of Republicans and Democrats. Their anxiety has no ideology. They all fear being the incumbent in the election in which the challenger says, in a debate: “That’s all well and fine, Senator, we’re sure you’re upset at what happened. But at the moment it counted, when you could have supported all efforts to keep the people safe and bust the terror network, you weren’t there. You were off giving lectures on what you call civil liberties, and explaining why you were voting ‘no.’ Well, life is a civil liberty—and now a thousand people are dead.” Nobody wants to be that incumbent.

Because of that primal political fear, there is a built-in bias within the U.S. government toward doing too much and not too little. There is a built-in bias toward using too much muscle, too much snooping, too much gathering of data. The bias is toward overreach. The era of metadata encourages all this: There’s always more information to be got.

Time To Add Back Some Some Fat To The Diet? Vegetable Oil Contains an Essential Nutrient: No Dietary Link Between Vegetable Oil Consumption And Inflammation Associated With Heart Disease, Cancer, Asthma And Arthritis

Posted by Milton Recht:

From "Vegetable Oil IS Good for You, Study Finds" on ScienceBlog:

Vegetable oils, like those from soy, corn and canola, are a significant source of calories and are rich in linoleic acid (LA), which is an essential nutrient. Since the 1970s, researchers have known that LA helps reduce blood cholesterol levels, and for decades, scientists have known that consuming LA can help lower the risk of heart disease.***In the study, "Effect of Dietary Linoleic Acid on Markers of Inflammation in Healthy Persons: A Systematic Review of Randomized Controlled Trials," researchers at the University of Missouri and the University of Illinois found that no link exists between vegetable oil consumption and circulating indicators of inflammation that are often associated with diseases such as heart disease, cancer, asthma and arthritis. While earlier animal studies have shown that a diet rich in LA can promote inflammation, MU [University of Missouri] animal sciences researcher Kevin Fritsche says that humans respond to LA differently.

"In the field of nutrition and health, animals aren’t people," said Fritsche, an MU professor of animal science and nutrition in the Division of Animal Sciences. "We’re not saying that you should just go out and consume vegetable oil freely. However, our evidence does suggest that you can achieve a heart-healthy diet by using soybean, canola, corn and sunflower oils instead of animal-based fats when cooking."

Linoleic acid is an omega-6 fatty acid that is a major component of most vegetable oils. This fatty acid is an essential nutrient and comprising 50 percent or more of most vegetable oils.

Apple And Google Spent More Money On Patent Litigation Than R&D

Posted by Milton Recht:

From Time Business & Money, "Viewpoint: Obama’s 'Patent Troll' Reform: Why Everyone Should Care" by Sam Gustin:

In 2011, Apple and Google spent more money on patent litigation and defensive patent acquisitions than on research and development. That’s not a good sign for the United States economy; in fact, it’s a stark indication that our intellectual property system is broken. Rampant patent litigation is impeding innovation and ultimately increasing the costs of gadgets for consumers, according to legal experts and industry observers.

In Memory Of D-Day, June 6, 1944, Reagan's 40th Anniversary Commemoration Speech At Pointe Du Hoc, Normandy

Posted by Milton Recht:

Study Estimates About 30 Million In US Will Not Have Health Insurance After Implementation Of ACA Health Care Law (ObamaCare)

Posted by Milton Recht:

According to the following recent study between 29.8 million and 31 million people will not have health insurance after the Affordable Care Act is implemented.

From HealthAffairs Blog, "The Uninsured After Implementation Of The Affordable Care Act: A Demographic And Geographic Analysis" by Rachel Nardin, Leah Zallman, Danny McCormick, Steffie Woolhandler, and David Himmelstein, June 6th, 2013:

Results. We found that if all currently undecided states opt-in, 29.8 million people will remain uninsured, whereas if all opt-out, the number of uninsured will total 31.0 million, 1.2 million above the opt-in scenario.
***

Source: HealthAffairs Blog

Dual Eligible Medicare Medicaid Enrollees Are 13 Percent Of The Combine Population But Account For 34 Percent Of Total Spending

Posted by Milton Recht:

From CBO, "Dual-Eligible Beneficiaries of Medicare and Medicaid: Characteristics, Health Care Spending, and Evolving Policies" June 6, 2013:

In 2009, the federal and state governments spent a total of more than $250 billion on health care benefits for the 9 million low-income elderly or disabled people who are jointly enrolled in Medicare and Medicaid.
***What Characteristics and Spending Patterns Distinguish the Dual-Eligible Population?
Dual-eligible beneficiaries are a varied group, but many have extensive health care needs, stemming from multiple illnesses and disabilities. In the case of full duals, for example, half initially qualified for Medicare because of disability rather than age, and nearly one-fifth have three or more chronic conditions (see figure below). Consequently, a sizable share of full duals, more than 40 percent, use long-term services and supports—a far greater percentage than for other Medicare or Medicaid beneficiaries.

Source: CBO

Although some full duals are fairly healthy and have relatively low health care costs, full duals as a group account for a disproportionate share of federal and state spending for Medicare and Medicaid. Full duals make up 13 percent of the combined population of Medicare enrollees and aged, blind, or disabled Medicaid enrollees (the categories of Medicaid participants who might also qualify for Medicare), but they account for 34 percent of the two programs’ total spending on those enrollees.

Lackluster US Job Growth Since Recession

Posted by Milton Recht:

From The Wall Street Journal, "The Hidden Jobless Disaster: At the present slow pace of job growth, it will require more than a decade to get back to full employment defined by prerecession standards." by Edward Lazear:

the better measure of a strong labor market is the proportion of the population that is working, not the proportion that isn't. In 2006, 63.4% of the working-age population was employed. That percentage declined to a low of 58.2% in July 2011 and now stands at 58.6%. By this measure, the labor market's health has barely changed over the past three years.***While the unemployment rate has fallen over the past 3½ years, the employment-to-population ratio has stayed almost constant at about 58.5%, well below the prerecession peak. ***The U.S. is not getting back many of the jobs that were lost during the recession. At the present slow pace of job growth, it will require more than a decade to get back to full employment defined by prerecession standards.

The striking deficiency in jobs is borne out by the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey. Despite declining unemployment rates, the number of hires during the most recent month (March 2013) is almost the same as it was in January 2009, the worst month for job losses during the entire recession (4.2 million then, 4.3 million now).***The proportion of unemployed who are long-termers reached 45% in April 2010 and again in March 2011. It is still above 37%. During the early 1980s, when the economy experienced a comparable recession, the proportion of long-term unemployed never exceeded 27%.***the various programs of quantitative easing (and other fiscal and monetary policies) have not been particularly effective at stimulating job growth. Consequently, the Fed may want to reconsider its decision to maintain a loose-money policy until the unemployment rate dips to 6.5%.

Japan's 2011 Fukushima Nuclear Accident 2 Years Later: No Deaths, No Serious Current Or Future Health Effects, No Long-Term Radioactive Areas: 1000 Died from Evacuation

Posted by Milton Recht:

From The Age, "Japan's radiation disaster toll: none dead, none sick" by John Watson:

two independent international reports conclude that radiative material released from Fukushima's four damaged reactors, three of which melted down, has had negligible health impacts.

In February, the World Health Organisation reported there would be no noticeable increases in cancer rates for the overall population. A third of emergency workers were at some increased risk.***Now the United Nations Scientific Committee on the Effects of Atomic Radiation has drawn on 80 scientists from 18 countries to produce a draft report that concludes: "Radiation exposure following the nuclear accident at Fukushima-Daiichi did not cause any immediate health effects. It is unlikely to be able to attribute any health effects in the future among the general public and the vast majority of workers."
***So, not even one case of radiation sickness to report.***The rapid decay of most of the radioactive material (iodine-131, which reduced to a 16th of its original activity in a month) also means the evacuated area has not been permanently blighted. Many residents have returned, although some areas have restricted entry until radiation drops below the 20 mSv-a-year threshold, expected in 2016-17.

Nor has the environment been devastated. The report says: "The exposures on both marine and terrestrial non-human biota were too low for observable acute effects."***About 1000 deaths have been attributed to evacuations. About 90 per cent were people older than 66, who suffered from the trauma of evacuation and living in shelters. Sadly, those of them who left areas where radiation was no greater than in naturally high background areas would have been better off staying.***This "perfect storm" hit a nuclear plant built to a 50-year-old design and no one died...the 11 reactors operating in four nuclear power plants in the region all shut down automatically. None suffered significant damage. (The tsunami disabled Fukushima's cooling system.)

Yet such is the imbalance of dread to risk on matters nuclear that this accident was enough to turn public opinion and governments against nuclear power. Never mind that coal mining kills almost 6000 people a year, or that populations of coal-mining areas have death rates about 10 per cent higher than non-mining areas, or that coal emissions drive global warming.

Our Earliest Primate Ancestors Were Tree-Dwelling Mouse-Like Creatures That Existed 55 Millions Years Ago

Posted by Milton Recht:

From The Wall Street Journal "Fossil of Unusual Human Ancestor Discovered" by Gautam Naik:

Fossil Found of Tree-Dwelling Human Ancestor

Researchers have identified a nearly complete skeleton of an unusual, tree-dwelling ancestor of humans that lived 55 million years ago, a discovery that illuminates one of the earliest stages of our evolution. Shown, an artist's depiction of Archicebus achilles, Chinese Academy of Sciences.

Researchers have identified a nearly complete skeleton of an unusual, tree-dwelling ancestor of humans that lived 55 million years ago, a discovery that illuminates one of the earliest stages of our evolution.

Unearthed in China, the mouse-sized creature has a mix of anatomical features that make it quite unlike any other primate—living or extinct—known to science. The discovery was published Wednesday in the journal Nature.

By about 55 million years ago, the earliest primate ancestors of humans had split into two branches. One branch gave rise to lemurs, lorises and bush babies. The other led to tarsiers, whose enormous-eyed, tree-dwelling descendants still live in Southeast Asia. The second branch also gave rise to anthropoids, including monkeys, apes and humans.

The animal described in the study is a primitive tarsier relative. It is of interest to scientists because it lived at a crucial period, fairly soon after the two branches split.

Stress Does Not Lead to Unhealthy Eating

Posted by Milton Recht:

From Association For Psychological Science, "Munching Through Life's Travails" by Wray Herbert:

contrary to received wisdom—neither Munchers [when stressed, eat] nor Skippers [when stressed, skip eating] is at greater risk for maladaptive eating. Indeed, there is no evidence here that stress leads to unhealthy eating, since it’s the balance through life’s ups and downs that matters. Munchers may compensate for their stress-induced munching by cutting back when life is pleasant, just as Skippers may make up for those skipped meals with good-time munchies. In this sense, Munchers and Skippers may differ less in their total calorie consumption—and more in the the dynamics of that consumption. Both, Sproesser concludes, have "a soft spot for food." [Emphasis added.]

Video Of Ben Bernanke's Princeton Commencement Speech, June 2, 2013

Posted by Milton Recht:

Remarks by Ben S. Bernanke from Princeton University on Vimeo.

The written text of the speech is available on the Federal Reserve Board website.

States Adding Extra Tax On Hybrid, Electric And Natural Gas Powered Cars To Pay For Highway Maintenance

Posted by Milton Recht:

From Bloomberg, "Losing Revenue From Hybrids Prompts States to Hit Owners" by Alison Vekshin:

Hybrid and electric cars are sparing the environment. Critics say they’re hurting the roads.

The popularity of these fuel-efficient vehicles is being blamed for a drop in gasoline taxes that pay for local highway and bridge maintenance, with three states enacting rules to make up the losses with added fees on the cars and at least five others weighing similar legislation.***"The intent is that people who use the roads pay for them," said Arizona state Senator Steve Farley, a Democrat from Tucson who wrote a bill to tax electric cars. "Just because we have somebody who is getting out of doing it because they have an alternative form of fuel, that doesn’t mean they shouldn’t pay for the roads."***Fuel taxes provide close to 40 percent of state revenue for highways, according to a 2012 report by the Denver-based National Conference of State Legislatures.

“Yet these revenues have not kept pace with needs...."

Per Capita State Debt

Posted by Milton Recht:

From Tax Foundation, "Monday Map: State Debt per Capita" by Richard Borean:

Tennessee has the lowest ranking with a [State] debt of $925 per capita, and Massachusetts has the highest at $11,309.

Source: Tax Foundation

Bernanke's Princeton Commencement Speech, June 2, 2013: Link To Text Of Full Speech

Posted by Milton Recht:

From written version of Chairman Ben Bernanke's Commencement Speech at the Baccalaureate Ceremony at Princeton University, June 2, 2013, "The Ten Suggestions" [PDF version]:

But my experience is that most of our politicians and policymakers are trying to do the right thing, according to their own views and consciences, most of the time. If you think that the bad or indifferent results that too often come out of Washington are due to base motives and bad intentions, you are giving politicians and policymakers way too much credit for being effective. Honest error in the face of complex and possibly intractable problems is a far more important source of bad results than are bad motives. For these reasons, the greatest forces in Washington are ideas, and people prepared to act on those ideas. Public service isn't easy. But, in the end, if you are inclined in that direction, it is a worthy and challenging pursuit.

The speech is also available from the Princeton University website. [Updated link, July 15, 2013.]

If Princeton decides to post a video of Bernanke's speech, it will most likely become available on this webpage of archived special events media. The video is currently not posted.

The video of Bernanke's Princeton speech is now available on Vimeo.

I have embedded the video in a later blog post, "Video Of Ben Bernanke's Princeton Commencement Speech, June 2,2013."

Fed And States Trying To Rein In Bitcoin And Other Virtual Currencies

Posted by Milton Recht:

From The Wall Street Journal, "'Virtual' Currencies Draw State Scrutiny" by Robin Sidel And Andrew R Johnson:

State banking regulators are scrutinizing companies that let people buy and sell virtual currencies such as bitcoin, and some are looking at requiring costly licenses, according to people familiar with the efforts.***n the past three months, the Treasury Department, prosecutors and now state regulators have taken aim at virtual-currency exchanges, telling them they must follow traditional rules aimed at thwarting money-laundering. The lightly regulated currencies have caught the attention of people who allegedly use some of them to mask profits from illegal activities.

Arianna Huffington's Commencement Address At Smith College, May 19, 2013

Arianna's speech is funny, relevant, never boring and about 25 minutes long. Here is a link to a transcript of the speech in case you rather read it then hear it. I suggest watching it because spoken humor often does not come across as well when read. Surprisingly, at least to me, the speech was non-political.